Rent Concessions and Illegal Contract Penalties in Texas
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Rent concessions-in theory a foregoing of money-ironically have become a new income source for Texas landlords. Although there is nothing wrong with discounting prices, there is something wrong with re-imposing that discount on a breaching tenant. The reimposed rent concession is a penalty that the landlord would not have collected in the routine performance of the contract and as a penalty, violates one of the oldest edicts in Anglo-American contract law. This article arose from advice given and brief services rendered to clients in a landlord-tenant matter. Using the facts and documents from that dispute, this article reviews the history of contract penalties and their distinction from liquidated damages and analyzes that rule's application to rent concessions. This analysis demonstrates that rent concessions, when re-imposed on the breaching tenant, are clear violations of a centuries-old Anglo-American ban on contract penalties. The article concludes with a short speculation into the reasons that these issues are not being litigated.
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